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Teva Pharmaceutical Industries Ltd Case Solution

Solution Id Length Case Author Case Publisher
2473 1514 Words (8 Pages) Tarun Khanna, Krishna G. Palepu, Claudine Madras Harvard Business School : 707441
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Teva Pharmaceuticals first laid its foundation in 1901 through SLE, a wholesale drug distributor in Jerusalem. It is considered to be Israel’s largest public company with a fast-paced biotechnology sector. It first set up its footing in the U.S market due to price controls and adequate government regulations. Over these years, Teva has successfully expanded into several countries like Europe, Japan, etc., and has introduced specialized innovative drugs. 

With adequate resources such as capital, skilled employees, technology, and information for research and development, Teva Pharmaceuticals has been able to gain considerably higher profits through generic pharmaceuticals since these drugs are similar to the versions of other generic producers. To gain a competitive advantage in the marketplace, Teva Pharmaceuticals employed effective strategies like price discounts, Abbreviated New Drug Application (ANDA), marketing, etc. to eliminate competition from the competitor existing in the market. 

Following questions are answered in this case study solution:

  1. How does Teva compete in the generic pharmaceuticals industry? What is its competitive advantage

  2. Evaluate Teva's resources. Which are its most valuable ones?

  3. Analyze the opportunities for Teva in innovative pharmaceutical and biosimilars.

  4. How should Teva move forward?

Case Study Questions Answers

1. How does Teva compete in the generic pharmaceuticals industry? What is its competitive advantage?

Teva Pharmaceutical Industries constitute a major part of the generic pharmaceutical industry due to its innovation strategies. Since the industry’s growth rate is at 20% within the last 5 years, it means that there is a greater chance of development. 

1. Innovation

There is a greater factor of competition here with pharmaceutical research being at high risk. However, Teva Pharmaceuticals makes sure to stay ahead of all other firms with its ability to continually introduce complex generic equivalents promptly. Also, the quality of these counterparts is up to the mark which means that the drugs seem quite similar to the active compounds that are created by the original drug maker and different drug versions are identical to the versions of other generic producers. 

2. Lower costs

Teva’s generic products are cheaper than their original versions because generic manufacturers do not have to take into consideration the research and development costs. Advertising and marketing costs as well as costs associated with costly clinical trials are not to be taken care of by generic manufacturers. This is why Teva Pharmaceutical Industries has been successful in keeping the costs of its generic products low. It also practices economies of scale where it produces huge quantities of generic drugs that ultimately reduce the cost of production. As a result of the lower costs, they can be sold at a relatively lower price as compared to branded products. This results in Terra Pharmaceuticals providing access to people the medicines they need. 

3. Diverse product portfolio

Being the largest generic drug manufacturer in the world, Teva provides a wide range of products that are distinct from others. Through the differentiation strategy, its products lie within a wide range of product portfolios. The products can be listed in the category of commodity generics, niche generics, biosimilars, etc.   

2. Evaluate Teva's resources. Which are its most valuable ones?

Teva Pharmaceutical’s resources are allocated based on innovative as well as generics areas. For example, there are less risky generic drugs and high potential innovative drugs.

1. Capital

Capital is one of the key resources used by Teva Pharmaceuticals to introduce new drugs to the market. To practice, the research and development of each drug take billions of dollars. For example, the development of Copaxone required approximately one-sixth $1 billion and launch it in the market. With enough capital, Teva has been able to employ several talented and experienced individuals in different departments of sales, marketing, research, development, etc. to ensure a smooth workflow.

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